Green peas hurting

WINNIPEG, Manitoba — The first field of green peas is reported to have been combined in southwest Saskatchewan, although the bulk of the harvest will not start until mid-August.

By:
John Duvenaud, Agweek

WINNIPEG, Manitoba — The first field of green peas is reported to have been combined in southwest Saskatchewan, although the bulk of the harvest will not start until mid-August.

In the winter of 2013, green peas went to $17 per bushel, if you could find them. Seedings were heavy in spring 2013 (410,000 acres) and the shortage was partially filled, but the pipeline had been emptied and prices stayed strong, although they fell to $10 after the 2013 harvest.

Current bids for green peas fell as low as $8 per bushel in July, although that was mostly nominal. Little business was written.

Now that most of the growing season is behind us, it’s apparent the new crop is also not going to be great. Seedings were up again — to 500,000 acres, but all that rain caused damage. Southeast Saskatchewan is probably worst. Perhaps 30 to 40 percent of those crops drowned or were hurt. There was crop loss all through eastern and central Saskatchewan and into western Manitoba. Many fields have been written off by crop insurance and most of the rest are the worst we’ve seen for years. In mid-summer, it looked like western Canada would produce 500,000 metric tons of greens, which, given normal usage, would leave a comfortable carryover. Now it’s obvious the crop will be at least somewhat, if not substantially, lower.

New-crop green bids are still hard to come by. They probably bottomed at $8, but will be moving higher now.

Lentils getting close

The first fields of lentils are starting to be desiccated. Certainly some lentil fields have been pounded by excess rain, but probably 95 percent are looking good.

Reds remain the hot commodity with new-crop prices at 24 to 25 cents per pound.

Greens have been dead for two years, and these are the lentils that have potential price appreciation. Laird plantings in western Canada dropped from 870,000 acres in 2013 to 767,000 this year. Richleas were steady at 50,000 acres, although this is mostly a North Dakota crop. Estons dropped from 245,000 acres last year to 200,000 in 2014.

The quality of the 2014 crop should probably be OK but, of course, it’s not yet in the bin. Carryover stocks of greens are not especially tight, but most global exports originate in Saskatchewan. These are not large volumes of back-up. New-crop green bids are close to, or below, old crop bids. There’s not a lot of downside with greens and, while there is no special indication of any shortage, there is potential strength down the road.

Canola near contract lows

November canola futures have been trading in a sideways pattern near contract lows moving into the harvest season. The market has further downside risk in the short term. Farmer selling is expected to increase in the next month and yield estimates are increasing. Most nearby demand is factored into the market, so there will be little support during harvest pressure. Finally, the soybean crop is almost through the critical pod-filling stage. Temperatures are favorable and yields have potential to exceed the earlier U.S. Department of Agriculture estimate, which will cause the soybean market to trend lower.

We anticipate a marginal 5 to 8 percent increase in South American soybean acres. If average yields materialize, the soybean market will continue to grind lower into the spring of 2015.

Palm oil supplies look to build in the next couple months in Malaysia and Indonesia, which will set a negative tone for the world vegetable oil market and weaken domestic canola crush margins. Outside influences will provide little market support.

Durum update

Canadian durum yields are expected to come in better than earlier anticipated, according to the recent industry crop tour. Farmer selling will now be larger than expected during the harvest season, which will temper the upside in the market during the first half of the crop year.

Despite the favorable yields in Western Canada, the world durum market has been percolating higher. The French durum crop suffered earlier in spring from dryness and then experienced adverse rains during harvest. A larger portion of the crop has been downgraded because of sprouting. France will not be a major player in the European and North African markets. The Italian crop also experienced adverse rains during harvest, resulting in larger import demand. Stocks in North Africa have eroded to tight levels because of lower production. Import demand from Algeria, Morocco and Tunisia will experience a sharp year-over-year increase. The world needs a large export program from Canada for the 2014 to ’15 crop year.

In Southern Alberta, U.S companies are bidding nearly $1 per bushel more than Canadian companies for immediate delivery.

Therefore, Canadian companies will also have to increase bids in the next couple weeks.

Barley under pressure

Feedlots in Southern Alberta were buying feed barley at $180 per metric ton delivered last week. The market is under pressure, given the favorable growing conditions in Western Canada and weakness in the corn market. The feed grain complex encourages demand through lower prices. But demand is quite limited at this time. Alberta and Saskatchewan feedlot inventories are at seasonal lows. Second, the world market is absorbing competitive supplies from Ukraine, Russia and Romania.

Editor's note: Duvenaud is the publisher of the Wild Oats Grain Market Advisory. For a sample issue, call 1-800-567-5671 in Western Canada and North Dakota, 204-942-1459 for all others, or e-mail admin@canadagrain.com or visit canadagrain.com.